Why Companies Won't Start Investing In Job Creation

ALL IS eerily quiet on the corporate front. Even though the
global economy continues to grow strongly, and the economic
recovery is nearly a year old even in America, corporate
investment, and mergers and acquisitions, remain at low levels
even though firms are sitting on record piles of cash.

This, in turn, is causing growing concern about whether the
recovery can continue, or at least continue with much strength.
As The Economist noted earlier this month, “If cautious firms
pile up more savings, the prospects for recovery are poor.”

Why are firms so cautious? One likely factor is that they regard
the outlook for the economy as highly uncertain, particularly in
America and Europe. The recent combination of volatility and a
declining trend in developed-world stockmarkets has reinforced
concerns that already abounded in companies’ executive suites,
that the recovery so far has relied too much on government
spending. That, given all the recent political talk about the
need for public austerity to fend off bond-market vigilantes, may
not continue. Meanwhile, private-sector demand remains anaemic.